Doom and Gloom at Calgary Gold Show

The Calgary Gold Show occurred over the weekend and brought together investors, industry experts and junior resource companies. The central theme at the conference was the huge mess that the US has got itself in and how the inflationary rescue of printing more and more dollars to cover up the mess will only worsen the situation. This is terrible news for US Citizens who have savings, real estate or are invested in the US Markets.

The silver lining to the Doom and Gloom message was that one asset class will definitely benefit from the US Economic Strategy of printing money and getting into more and more debt. If you want to make money as an investor, you will need to invest in commodities (hard and soft) and energy. Gold, Silver, Platinum, Copper, etc. will all continue to rise in price as the dollar falls. This will assist the bottom lines of the companies that are mining them and will offset inflationary pressures which are currently holding them down. When the general public (CNN, CNBC, etc.) start to recognize this we can expect a stampede of investors into commodities. This is the stage where the most money is made and we need to start thinking about an exit strategy. The experts agreed that this will not happen for a few more years but will continue to build. Eventually the misguiding of the media will be discovered and revealed for what it was. Unfortunately, many americans and other people around the world will have lost their hard earned savings by that point of realization. Energy will also continue to rise in price as demand from China, India, Brazil, Europe, Etc. will make up for a recessionary slowdown in demand from the US. Uranium and Alternative Energy will continue to benefit from increase energy demands and tighter environmental rules.

There were some very interesting companies were presenting at the conference that could provide us as investors with big gains down the road. In no particular order, here is a quick run down of some of my findings.

Companies we currently hold:

Silver Eagle Mines (SEG)-http://www.silvereaglemines.com/overview.php
Company has proven up reserves of over 30 million ounces of silver. They will be coming out with a new resource estimate this summer that could double that reserve. They are producing and will grow production expontially over the next two years. Trading at $0.80 a share and I have a target price of $2.00 a share by next year this time.

Aurcana (AUN)-http://www.aurcana.com/s/Home.asp
Aurcana's management has maintained its strategy of acquiring past producing mines and putting them back into production. They recently signed a deal with Silver Standard Resources to take over the Shafter Silver Mine in Texas. There goal will be to have it into production in 15 months. Once into production, it will add 2.5 million ounces of silver to their production profile per year. This will provide huge leverage to the price of silver. The company will be doing a financing in the near term to pay for the acquisition. This will hold the stock down but as it moves closer to getting this mine into production, you can expect a rise in price closer to its peer group of 2 million ounce plus producers. That would value Aurcana at about $2.50 a share when it is currently trading at about $0.75 a share.

Avalon Ventures (AVL)http://www.avalonventures.com/
We spent a lot of time speaking with the president of this rare earth gem. Avalon has been progressing towards becoming the first rare earth producer in Canada. Changes in technology (Hybrids, Batteries, Solar Cells, Flatscreen TV's, IPODS) recently have created a huge demand for Rare Earth Metals. This year alone there will be a 50 000 ton shortfall in production which is coming primarily from China. Avalon has been meeting with Japanese Investors who need to secure these metals for production of electronics. The company has a 100 million dollar market cap but potentially over a Billion dollars of metal in the ground. We liked what the president said and see this company as a leader in this new niche market. Target price by next year is $3.00.

Interesting Companies to Keep an Eye On

Metanor Resources (MTO)
http://www.metanor.ca/exploration-miniere/apropos_profil_ang.cfm
I have liked these guys for a while now and was excited to hear that they would be presenting at the goldshow. Metanor is a producing gold company (45000 ounces this year) that is operating near Val D'or, Quebec. They have a number of properties located around their mill and have reserves that are now over 1 million ounces of gold. The really exciting fact I learned at the tradeshow is that Robert Cohen, Fund Manager of Dynamic Precious Metals fund has just bought 3 million dollars of stock in the company on the open market. Metanor's cashflow from operations will be reinvested in the exploration and increase of the companies milling capacity. I have a target price of $2.00 a share on this one as well.


Arian Silver (AGQ)http://www.ariansilver.com/s/home.asp- I might be a little biased on this one as they took me out for a fabolous dinner on Saturday night. I did get a chance to sit next to the CEO and took the opportunity to fire a million questions at him. I was impressed by his passion for the project and his knowledge of the deposit. Arian is striving to prove up 100 000 000 ounces of silver in the next year. They have the goal of putting the San Jose mine back into production by 2009. A 4301 resource estimate should be arriving this summer which will greatly enhance the fundamentals of this project. Trading at a discount to net value at $0.35. My target on the stock is back to its high of $0.70 by next fall. That is a near term double which is always nice in the investing business.

Gold-Ore Resources (GOZ) http://www.goldoreresources.com/s/Home.asp
This is a small gold producer that is headquartered in Sweden. They took over a past producing mine and have put it back into production. They will exit 2008 at 25 000 ounces of gold. The gold that they are mining is actually found in quartz. They are planning on building shareholder value by using the funds from production to explore some very prospective deposits on the same property. I was impressed with the management team at the conference and with the fact that the CEO was the past president of Cumberland Resources which just last year got taken over by Anigo Eagle.

There was many other interesting companies at the conference and the excitement was definitely in the air over things to come for this sector. Some other companies of note include: Barker Minerals http://www.barkerminerals.com/s/Background.asp, Discovery Air http://www.discoveryair.com/ and Kodiak Exploration http://www.kodiakexp.com/.

I see gold and silver being caught in a trading range (consolidating) for the next few months and predict that the next leg up in the fall will drive gold to $1200 an ounce and Silver to $30.00 an ounce. The juniors haven't had a big move yet but when the prices run in the fall, the patient investors should be rewarded.